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EA’s closure of Maxis Emeryville highlights its historical strategy

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Game studios acquired and shut down

In the previous part of this series, we discussed the closure of Electronic Arts’ (EA) Maxis Emeryville studio. EA has absorbed various game studios, including:

  • Westwood—credited for the Command & Conquer and Dune series
  • Origin—credited for the Ultima, Wing Commander, and Crusader games
  • Bullfrog—credited for Syndicate, Populous, and Dungeon Keeper
  • Pandemic—credited for The Saboteur and Star Wars
  • Battlefront Games
  • DreamWorks Interactive—credited for Medal of Honor
  • Black Box Games—credited for Need for Speed and Skate
  • Mythic—credited for Dark Age of Camelot

You can consider investing in the PowerShares QQQ Trust (QQQ) and the Technology Select SPDR (XLK) to gain exposure to Electronic Arts. EA makes up about 0.35% and 0.47% of these ETFs, respectively.

The above chart shows that, among the investments in the gaming sector in 2013, mobile devices led the market. In September 2014, Microsoft (MSFT) announced its acquisition of Mojang, a Swedish company popular for its game Minecraft, for $2.5 billion in order to strengthen its presence in the mobile space.

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EA’s “pick them and dump them” strategy

EA has bought up studios only to close them down when these games failed to appeal to the mass market. So the closure of Maxis Emeryville isn’t very novel in the company’s history. EA is known for acquiring once-popular game developers and franchises and, when they don’t meet the preference of its users, dumping the studios and their associated games. We saw more about this trend in the previous post in this series.

This approach definitely appears to be a sound predatory strategy on EA’s part. EA would otherwise have to compete with these studios and parent companies for market share. In 2014, according to consumerist.com, in 2014, EA was voted as the Worst Company in America twice in a row. In 2014, Time Warner Cable (TWC) took over this title.

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